Warner Bros. Discovery is a global media and entertainment company combining content production, distribution and streaming assets, with a financially mixed profile that shows strong cash generation and per-share compounding alongside pronounced volatility in earnings and margins.
The company is generating meaningful per-share growth and equity accretion: 5‑year revenue-per-share CAGR is 18.03% and 5‑year book value-per-share CAGR is 24.58%, with the most recent 1‑year revenue-per-share growth at 182.0% (see EPS Diluted & Revenue per Share and Revenue & EPS Growth). Cash generation is a clear strength — operating cash flow has historically exceeded net income by about 5.94x and the most recent free cash flow margin is 14.27% — indicators of high earnings quality and capacity to fund operations (see Earnings Quality Analysis and Strategic Capital Allocation).
At the same time, durability and consistency are concerns. Trailing operating cash flow fell from a peak TTM of $8.69B (2024-03-31) to $4.32B most recently (TTM), and net income swung from TTM losses as large as -$12.84B (2024-06-30) to a positive TTM net income of $727.0M in the latest period, underscoring large swings in profitability (see Revenue & Net Income and Strategic Capital Allocation).
Key fundamentals to monitor going forward are the trend in operating cash flow (most recent TTM $4.32B) and free cash flow margin (14.27%), the continuity of per-share recovery in revenue and EPS (most recent revenue per share $30.05 and diluted EPS 1.09); see EPS Diluted & Revenue per Share), stabilization of net margins (recent net margin 3.4%; see Profit Margin Trends), and changes in the market multiple (PE most recently 26.3x; see Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
Warner Bros. Discovery, Inc.'s reported revenue shows large quarter-to-quarter volatility in the data provided. In the most recent sequence, revenue moved from $17.95B on 2025-12-31 to -$1.68B on 2026-03-31, with intervening quarters of -$3.87B (2025-09-30) and $7.55B (2025-06-30). The series also contains pronounced earlier extremes such as $61.10B (2022-07-01) and -$18.65B (2024-12-31), indicating sharp inflection points across the multi-year history.
Net income for Warner Bros. Discovery, Inc. has been similarly variable, with multiple quarters of losses through 2023–2024 followed by a positive net income in the latest reported quarter. The company reported net losses like -$9.99B (2024-06-30), -$966.0M (2024-03-31), and -$453.0M (2025-03-31) before reporting net income of $1.18B for the period ending 2025-12-31. The most recent quarterly revenue was -$1.68B. The most recent quarterly net income was $1.18B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Apr 2025 to Mar 2026, Warner Bros Discovery Inc converts approximately 15¢ of every revenue dollar into gross profit (gross margin: 14.9%).The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Apr 2025 to Mar 2026
Analyzing long-term margin stability and competitive positioning
Over the most recent quarters Warner Bros. Discovery, Inc. shows a pronounced move from low single-digit margins at year-end 2025 to materially higher margins in Q1 2026. The December 2025 quarter recorded gross margin 3.5%, operating margin 3.4% and net profit margin 3.4%, while the latest quarter ending 2026-03-31 shows gross margin rising to 14.9% and operating margin to 17.0%. Notably, the most recent operating margin (17.0%) exceeds the most recent gross margin (14.9%) in the dataset.
Across the longer record the company’s margins are highly volatile with several sharp inflection points: exceptionally elevated gross margins in 2023–2024 (peaking at 347.4% on 2024-03-31 and multiple quarters above 200%), strong operating and net margins in parts of 2023–2024 (operating margin 51.8% on 2024-06-30; net margin 59.8% on 2024-06-30), and negative operating and net margins reported for 2022-12-31 (-13.6% each). The most recent Gross Margin was 14.9% (period end 2026-03-31); the most recent Operating Margin was 17.0% (period end 2026-03-31); the most recent Net Profit Margin was 3.4% (period end 2025-12-31).
Understanding Profit Margins
Between Apr 2025 and Mar 2026, Warner Bros Discovery Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Warner Bros. Discovery, Inc. shows a pronounced divergence between reported net income and operating cash flow over the recent trailing twelve-months. Operating cash flow has remained positive across the series but trended down from a peak around $8.69B (period ending 2024-03-31) to $4.32B in the most recent trailing twelve-month. Net income swung from large losses through 2023–2024 (e.g., -$12.84B at 2024-06-30 and -$11.31B at 2024-12-31) toward a materially improved position by the end of 2025.
The most notable inflection is the recovery in net income from deep TTM losses in 2023–2024 to a positive TTM net income in the latest period, while operating cash flow declined but remained positive throughout. The most recent trailing twelve-month operating cash flow was $4.32B. The most recent trailing twelve-month net income was $727.0M.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Warner Bros. Discovery, Inc.'s ROE has exhibited significant volatility over the past several years, with a pronounced negative trough in 2024. After a modestly negative ROE of -6.7% at 2023-12-31, the metric declined further to -37.4% (2024-06-30), then improved slightly to -32.4% (2024-12-31) and -30.7% (2025-03-31) before transitioning into positive territory by the 2025-12-31 period. The most notable inflection point is the shift from deeply negative ROE in 2024–2025 to a positive reading at the end of 2025.
Earlier history includes positive ROE readings in the mid-2010s (e.g., 20.3% in 2014, 23.1% in 2016, 19.0% in 2015) and around 10–13% in 2020–2021, illustrating wide variability across the full series. The most recent trailing twelve-month ROE (period end 2025-12-31) was 2.0%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Warner Bros. Discovery, Inc.'s operating cash flow (TTM) rose from $4.30B at 2022-12-31 to $7.48B at 2023-12-31 and peaked at $8.69B in the 2024-03-31 TTM, then declined through the subsequent periods to $4.32B as of the 2025-12-31 TTM. The key inflection point is the 2024-03-31 peak followed by a marked reduction in operating cash into 2025.
Investing cash flow (TTM) has been persistently negative, with a recent TTM outflow of -$349.0M at 2024-12-31, smaller in absolute terms than earlier multi-year outflows (for example, -$438.0M in 2019 and -$633.0M in 2017).
Financing cash flow (TTM) showed large net outflows around 2022–2023 (about -$7.74B at 2022-12-31 and -$7.59B at 2023-03-31) that moderated to -$3.75B in the 2024-12-31 TTM. The most recent Operating Cash Flow (TTM) was $4.32B. The most recent Investing Cash Flow (TTM) was -$349.0M. The most recent Financing Cash Flow (TTM) was -$3.75B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
The available quarterly PE data for Warner Bros. Discovery, Inc. shows a rise in the most recent reported quarter: the PE ratio is 26.3x for the period ending 2025-12-31. Prior reported values in this dataset are sparse for the intervening years; the most recent earlier observations are 11.6x (2021-06-30), 21.2x (2021-03-31) and 16.4x (2020-12-31), indicating variability across the prior reporting points rather than a smooth trend given the gaps in the series.
Looking further back, the dataset includes higher historical readings such as 27.7x at 2018-12-31 and several mid-teens readings in 2015–2016. Because multiple quarters between 2022 and 2024 are blank in this extract, only the reported points should be used for comparison. The most recent Price-to-Earnings ratio for Warner Bros. Discovery, Inc. was 26.3x (period end 2025-12-31).
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.